• 28
  • December
    2011

For most people, the family home is the most important asset they own. Usually, when one spouse dies, they want the other to inherit full ownership of the house. When the second spouse dies, the couple wants the home to pass to their children or other beneficiaries.

However, this transfer can sometimes have substantial estate tax implications. Under normal circumstances, the home will pass to a surviving spouse without tax liability. When the second spouse dies, though, the transfer of the property to children or other beneficiaries can trigger estate tax payments.

It's often a good idea for high net worth married couples to consult with an estate planning lawyer to find ways to preserve as much wealth as possible.

One helpful step can be to equalize the property each person owns.

Former Penn State football coach Joe Paterno made news when it became known that he had sold his share of the family home this summer to his wife for $1. Previously, they had owned the home jointly.

Some commentators said this was a sign he was shielding himself against possible liability arising from the football program's sex abuse scandal.

Financial experts, however, simply saw it as good estate planning.

Under current federal law, married couples are allowed to split a $10 million estate tax exemption - $5 million each.

It sometimes makes sense, then, to equally divide the couple's property amongst the two parties. If one partner owns most of the couple's assets and dies first, the surviving spouse's estate tax exemption could end up wasted.

Everyone wants to preserve their family's legacy. Good financial planning is the first step. Talk to an experienced estate planning attorney who can help you understand the best options for your family.

Source: New York Times, "Joe Paterno's House and the Estate Tax Question," Paul Sullivan, Nov. 16, 2011.